Investors Bail on Risk Assets After French, Greek Elections

Risk assets fell broadly on Monday after elections in Greece and France fuelled questions about whether Europe will continue to pursue austerity measures seen by markets as crucial to resolving the euro zone's debt crisis.

For Greece’s new government, any hopes of a forgiving European Union evaporated this week. The euro zone’s central bank decided on Wednesday that banks would no longer be able to use poorly rated Greek government bonds as collateral for credit. In its decision, the bank cited its lack of confidence that Greece would be able to meet the terms of its 240 billion euro rescue program. The move suggests that Europe will only help them find new access to funding if Greece pays off its debt according to schedule or agrees to extend the terms of its bailout.

HONG KONG/SHANGHAI: As the risk of Greece leaving the euro zone looms larger, Chinese companies are making tentative assessments of potential buying opportunities in the country, according to banking sources. China Premier Li Keqiang assured European leaders on Monday that the country wants Greece to remain in the currency area and urged international creditors to reach an agreement on its debt.

The recovery for most of the euro zone will certainly begin in the second half of 2013
PARIS — The eurozone’s crisis is far from over and its members must consolidate their budgets and forge a banking union to put the bloc on a more stable economic footing, the leaders of the IMF and European Central Bank said on Friday.

Time to breathe a sigh of relief, with resolution of the Greek bailout? Not so fast. Greece is likely to need re-adjustments to its plan [0] Plenty of challenges remain in the eurozone; PIMCO's El-Erian says Portugal is next [1]. In fact, as Jeffry Frieden and I argue, the resolution of the problems facing eurozone policymakers is likely to be contentious and prolonged.

Reuters - Germany and France have reached an agreement on how a future permanent mechanism for resolving debt crises in the euro zone should work once it is introduced in 2013, euro zone sources said on Sunday.